Allianz pulls $1.7B bid to buy stake in Singapore insurer

Enjoy complimentary access to top ideas and insights — selected by our editors.

(Bloomberg) --Allianz SE withdrew an offer to buy a majority stake in Singapore's Income Insurance Ltd. for about S$2.2 billion ($1.6 billion), dealing a blow to its ambitions in a key growth market.

Allianz decided to walk away from the deal after the Singaporean government said it shouldn't proceed on its present terms and changes were made to the city-state's Insurance Act, according to a statement Monday, which confirmed an earlier Bloomberg News report.

The deal collapse is a setback to Chief Executive Officer Oliver Baete's effort to accelerate growth in Asia, a region Allianz has highlighted for potential acquisitions. Still, the decision wasn't a major surprise after the government had voiced strong opposition.

Allianz shares fell as much as 0.5% in Frankfurt on Monday. They're up about 25% this year. 

"Disappointing as this withdrawal may be, it is not material to our investment thesis and we expect Allianz to continue to explore opportunities in Singapore and across Asia," Keefe, Bruyette & Woods analyst William Hawkins wrote in a note. "Asia remains a region of strategic growth for Allianz."

Read More: Singapore Amends Law to Stop Allianz's Insurance Deal

The German insurer originally announced a pre-conditional voluntary cash general offer for Income in July. The deal would have turned Allianz into the fourth-largest composite insurer in Asia, it said when announcing the transaction. 

But the Singapore government said in October that it wouldn't be in the public interest to allow the deal to proceed. It wasn't satisfied that Income would still be able to fulfill its social mission as a co-operative after the acquisition, Minister of Culture, Community and Youth Edwin Tong said at the time.

"We regret having to make this decision" to pull the deal, Renate Wagner, member of the Allianz board of management and responsible for the Asia-Pacific region, said in the statement on Monday. "We respect the Singapore Government's decision."

Allianz had said in October it would work with stakeholders to consider revisions to the transaction structure. 

Income said in a separate statement Monday that it will continue to explore liquidity options for shareholders, adding that business continues as usual with no impact on policyholders.